The rapidly growing mobile credit-card processing company has joined an increasing number of Silicon Valley–area tech firms, including Google, Facebook, Twitter, LinkedIn, and crowdsourced question-and-answer site Quora, in eliminating the phone as a customer support channel. But is abandoning the telephone for low-cost online channels the right move for your organization?

For Square, cutting phone support was about efficiency and effectiveness. "We've experimented with phone support, but we believe there are more effective and efficient ways to help our customers get answers to their questions immediately," Aaron Zamost, a company spokesman, says.

Square encourages customers to find their own answers through online forums, a series of YouTube videos, and an online help center with more than 150 pages of questions and answers. When and if customers can't find the answers on their own, the company encourages them to reach out through email or the company's dedicated Twitter handle, @SqSupport. That Twitter stream has about 30,000 followers.

Despite its lack of phone support, Square was on pace to process roughly $8 billion in payments last year, up from $1 billion in 2011.

Nonetheless, some of Square's biggest competitors, including PayPal, Verifone, NCR, Groupon, and PayAnywhere, have tried to use Square's lack of phone support to their own advantage, emphasizing that their customers can call at any time.

PayPal, which is owned by online auction site eBay, has 123 million active accounts and a staff of more than 6,000 customer service personnel to assist them. "Customers are at the heart of the PayPal business," a company spokesperson stated in an email."As the PayPal experience has innovated over the years, we've ensured that customers can access the help they need through whatever channels they prefer. Through a combination of phone support, online, and social channels, customers are able to access our customer service representatives twenty-four/seven to ask questions and address whatever issues they may have."

The company, the spokesperson added, "works constantly to ensure that all of our customers have the support they need when they want it and where they want it."

Naturally, this can be an expensive endeavor, but many experts argue that phone support is essential. "I'm not sure I would ever recommend ceasing the availability of the phone as a [customer service] channel," says Andrew McNair, head of global benchmarking at Dimension Data. "The telephone is still an absolute necessity. It's not a good idea to get rid of the phone entirely."

Kate Leggett, a principal analyst at Forrester Research, calls the decision to do away with phone support "tricky."

"If you are focused on customer experience as a competitive differentiator, you may not necessarily want to be eliminating the voice channel," she says. "Across all demographics, voice is still the primary communication channel used."

What the Data Says

Current research supports this claim. Consulting firm Fifth Quadrant found that for 71 percent of consumers, talking with a live agent over the phone was still the top preference, especially for registering complaints (66 percent), making purchases (62 percent), and asking technical questions (70 percent).

That's not surprising, given that the phone has the highest query resolution rates, according to Fifth Quadrant's research. Live agents resolved 88 percent of issues on the first attempt; for interactive voice response (IVR) systems, it was 81 percent. Web self-service, the primary channel chosen by Square, had the lowest resolution rate, at 66 percent.

Part of the reason for this, according to McNair, is that many customer issues have grown in complexity and can't be easily resolved through an online forum or question-and-answer database.

But despite the phone's position on customer preference charts, it is losing ground to email and chat. In Fifth Quadrant's rankings, the phone dropped 15 percentage points in the past year alone, down from 86 percent in 2011. At the same time, consumer preference for email grew to 64 percent, up from 51 percent in 2011. Chat grew to 28 percent, up from 19 percent in 2011. Text and social media came in at 10 percent each, up from 4 percent and 3 percent respectively in 2011.

The latest Call Center Satisfaction Index, published by analytics firm CFI Group, confirms that online options are rapidly making up more of the customer service engagement mix. In the report, the company found that non-phone-based contact methods, including email, Web self-service, and chat, now account for more than 30 percent of customer service engagements.

Forrester Research has also seen customer service moving toward digital channels. According to Leggett, Web self-service has seen a 12 percent increase in usage in the past three years; chat has seen a 24 percent increase, and social communities have seen a 25 percent increase.